As an American citizen, or someone who is knowledgeable about American economics, it can be difficult to imagine the country without the United States Federal Reserve. But did you know the Federal Reserve is only about one hundred years old? And that the United States functioned perfectly well before it came into existence? These facts, and others which concern the US Federal Reserve system, may just surprise you.
The History of the Federal Reserve
When the US dollar was first invented, it was backed by something known as the gold standard. This means for every dollar a citizen took out in paper, there was an equal amount of gold backing it somewhere in a bank. This created issues because if someone who held a large amount of money decided to change their cash back into gold, the bank would have to come up with enough to pay them immediately. And back in the late 19th century, all banks were privately held separate entities, which meant if you had an account at the local bank, that was the only bank which could issue you cash or gold as that was the only bank you would have an account at.
As crazy as this may seem in our current day in age, back in the 1890’s, people didn’t leave the town they lived in very often. And if they did, it was usually to move across the country. They simply didn’t have a use for a bank which had multiple branches in multiple states. But as the political and social situations in the United States began to change, so did the banking situation. This led to a currency panic in 1907, when a bunch of people began trying to pull their money out of the bank only to find the bank didn’t have enough to pay them. This was because banks were starting to issue loans and simply didn’t keep a lot of money on hand.
This panic however, is shrouded in controversy, as a number of people who believe in decentralization think that it was caused by the bankers in order to push for the creation of the Federal Reserve. If this is true or not, we may never know, but it is highly possible that bankers created this panic because the Federal Reserve benefits them, not the average citizen. More on this later.
Anyway, after the financial panic of 1907, a proposal was born known as the Glass-Willis proposal which would establish a federal reserve system in order to curb currency panics. This was later reshaped an adapted into the Federal Reserve Act which Woodrow Wilson signed into law in 1913. After this was passed, all banks were backed by the US government which would issue them currency as needed.
How Does The Federal Reserve System Benefit The Wealthy?
In 1913, when the Federal Reserve system was established, this meant that each individual dollar was no longer printed by your normal bank which had verified the existence of your gold. Instead, dollar bills and coins would be printed by the US government. But of course, everyone knows the US government wasn’t going to actually build a factory to print all these bills. They were going to outsource it to banks which already had large printing capabilities. This mean bankers, who owned large banks, would be paid to print US dollars by the US government.
And who owned these banks back then? Why, the same men who had been pushing for the signing of the Federal Reserve Act. Convenient right? You may recognize some of their names, such as the Rothschild’s, Goldman Sachs, Chase, Lezard Brothers, and Warburg. So suddenly, rather than only making money when they lent people money, these banker hot shots were making a fee on every dollar they printed for the US government. In essence, the Federal Reserve system made these rich men even richer.
Think about it for a second, how many of these names are still in finance and banking today? Almost all of them, right? Well, when you get paid for simple printing, and it’s a job financed by the government, you know the money will never stop rolling in, so why would you stop it?
And this is why, when things began to go financially awry in the United States after World War II, these same banker families pushed for the US to leave the gold standard. With the gold standard in place, they could only charge the US government to print a certain amount of money per year. But if this were to say, disappear, suddenly they would be in business convincing the government to print as much cash as they wanted. The gold standard was eliminated by President Nixon in 1972.
After the gold standard was gone, it seemed, for a while, that the banks which worked to print the federal reserve currency, had it locked up. They could use their power on Wall Street to convince the government to print whatever currency they wanted. And it made them richer every time they did so.
But, in the late 1990’s, these banks started to face another problem as digital money became more and more of a commonplace. Instead of cashing their paychecks, people were suddenly very interested in keeping their money digital and spending it via debit or credit card. Think of the cards currently in your wallet, do any of them have one of the names mentioned above on them? Exactly, the same banks which were charged with printing the currency were now shifting to adapt to financing people’s digital currency habits. And they did so with ease.
The year 2009 brought an entirely new host of problems for the Federal Reserve banks. Suddenly, a decentralized currency, known as cryptocurrency, which the US government couldn’t control, was brought into existence. This did not make these big wigs very happy. Especially because in 2008, the same men who benefit from the printing of currency had just convinced the US government, via lobbying, to give them a ton more money, and the job of printing said money. Once again, this was very convenient as most of them had just lost millions in the real estate bubble and now not only was that money given back to them, but they made a fee off of printing it for themselves.
This new cryptocurrency, at first, didn’t seem much of a big deal. Who knew what Bitcoin was anyways? But slowly, the currency began to gain traction, and the more people invested in this cryptocurrency known as Bitcoin, the more these large banks began to panic. This led to them creating a campaign which tried to label Bitcoin as “dangerous” or “used as terrorists” by the public, when this is indeed not true at all. Rather, criminals in the twenty first century, tend to use physical goods to transfer money, such as cigarettes or art as they learned long ago that money was far too traceable.
So why create this phony campaign? Well, these few men, have become rich off of the US government printing money, and if this goes away, what will that have left? The honest answer is, well, millions, because they are still bankers and have been wealthy families for generations. But of course, they don’t see it that way. They don’t want to kill the cash cow, which is literally what the Federal Reserve is for them. Thus, they will continue to peddle their anti-cryptocurrency campaign to both the public, and the government, in order to try and preserve their easy profits.
What This Means
If you have not yet invested in cryptocurrency because something on the news has told you it is bad, or used by terrorists to launder money, it’s time to make your own decision. Don’t trust what the government has told you about your money system. Because when the government prints money, this creates inflation, which is damaging to your finances and your savings. And while your money is devalued in the bank by this printing, the bankers which already make money off your loans will only continue to grow richer without your say.
Investing in Bitcoin is taking back control of the monetary system in the US. A centralized system like the Federal Reserve only benefits the few, while Bitcoin benefits everyone. Of course, these rich few families don’t want you to know that.